‘Africa’s economic growth does not have one answer’

African Update – 29/12/13

Kenya’s former minister of industry, Mukhisa Kituyi, was appointed as UNCTAD’s secretary-general in September 2013 making him among the highest-placed Kenyan diplomats in the world. He is only the second African secretary-general of UNCTAD, after Ghana’s Kenneth K.S. Dadzie held the post between 1986 and 1994. Stephen Williams went to Geneva to interview him.

Kenya celebrated its 50th independence anniversary on 12 December, and the United Nations Conference on Trade and Development – more generally known by its acronym as UNCTAD – will celebrate its 50th birthday in 2014. For its new secretary general, Mukhisa Kituyi, appointed in September 2013, the immediate task is to navigate what he describes as “fairly turbulent waters”, stabilise the institution, and effect a management reorganisation and policy shift.

“What we are trying to do as an institution is change our measurement of success based on the number of publications we produce to a measurement based on delivery of development dialogue,” Kituyi told New African. “What I mean is that this organisation produces 180 documents a year. Now that is a fulltime job – you become a publishing house – but that is not our core mandate. So what I am trying to do is reorganise our priorities to interface with decision makers on development policy in the developing world.”

It is clear that, to coin a phrase, the new secretary-general feels the hand of history on his shoulder. “Next year [2014] we mark our 50th birthday, on 16 June, and this is a historic opportunity not only to talk about where we are coming from but to reflect on the reality of the changing global conditions, and therefore start defining a medium-term goal for the organisation that is relevant to these changing realities,” he said.

What Kituyi wants to see is a more diversified G77 group of developing countries. The G77 came into being at the end of the first UNCTAD meeting in 1964 as the largest intergovernmental organisation of developing countries (belonging to the UN) to provide the means for the countries of the South to articulate and promote their collective economic interests.

“These countries are the primary constituents of this organisation,” Kituyi explained, “but it is a much more diversified group today than it ever was before.”

A one-size-fits-all economic strategy is as futile today as it ever has been, and the different situations in different countries present obvious challenges. Kituyi agrees: “While in some countries, competition policy is a key consideration in which they want our advice, in others it may be the creative industries that is the driver of new thinking. In others, trade logistics and the dynamics of progressive regional integration might be the key consideration, so we must start finding how to be loyal to our purpose for segmented audiences because of the different specific conditions in the global south.”

The secretary-general had already said that, as an institution, UNCTAD was created at a time when there were limited alternative voices on trade and development, but there were now far more institutions in this field. Indeed, one of the criticisms of the UNCTAD role is that it duplicates the work of other institutions.

But Kituyi has an elegant riposte to this suggestion. “My understanding of the English language says that if a newcomer comes along and starts doing what an established player has been doing, it is not the established player replicating what the newcomer is doing! And, as you know, imitation is the best form of flattery!”

Nevertheless, Kituyi does accept that this criticism of duplication is a serious point, and he has heard these arguments before, particularly in terms of the World Trade Organisation (WTO) and the International Trade Centre which is, in fact, a joint co-operation agency of UNCTAD and the WTO.

As he states: “The WTO is a rule-making organisation in world trade, and a litigation forum for dispute resolution in trade, that has come to play an increasing role on the development side, partly because of the stalled Doha Trade round negotiations, and therefore the capacity in-house can be moved to aid for trade facilitation, not so much in technical strengthening but in technical support.

“We, as an institution, support the WTO as an organisation. But we still see a core area that belongs to us. We are the only international institution with a mandate to deal with trade and development with areas like finance, investment and environment in a way that primarily focuses on developing countries as a development input, not simply rule making.”

This viewpoint is both refreshing and reassuring. For it means that with UNCTAD, the economies of the South have the means to drive the development agenda rather than be dictated to by the historically more powerful economies of the North.

“Our intervention is ahead of the curve about what are emerging issues and how we can deliver this into enriching policy dialogue, particularly in developing countries, in the context of emerging global trends.”

The relationship between trade and development has been debated for years, most notably with the call for "trade not aid", and when questioned on this, Kituyi was quick to say that, in his view, trade was an important tool for the growth of an economy – but trade on its own did not necessarily automatically lead to development.

“You can have extractive trade that just degrades your national stock of resources with a limited social impact on the side,” Kituyi explained, “so disciplining trade to the service of development is an active intervention by policy makers, but it does not come on its own by the sheer presence of trade, so what we see as our mandate is how we can discipline trade to the service of inclusive, sustainable social progress.”

There is a school of thought that suggests that UNCTAD is a counterweight to the World Bank and the International Monetary Fund, even if UNCTAD is not, of itself, a funding institution.

Proponents of this theory claim that UNCTAD has the intellectual weight to provide the independent analytical work that can challenge the Bretton Woods stance when that stance runs counter to the interests of the developing world. But Kituyi is not sure that he agrees with this viewpoint.

“We are not a counterweight but we do have the mandate to provide an intellectual product that might not necessarily say the same things that the World Bank and IMF are saying, but we do not define our raison d'être in terms of being a counterweight to these institutions.

“In fact, many times we find common ground with the World Bank, the IMF and the OECD, but sometimes our work, particularly analytical work on global macroeconomic trends, may give rise to positions that are not necessarily the same as those of these other institutions.” Kituyi then went on to give an example of UNCTAD’s analysis that ran contrary to the thinking of the Bretton Woods institutions. “Over the past few years, UNCTAD has been saying the fundamentals of global financial governance are not very consistent with long-term stability. The reality is that deregulation was not necessarily the Godsend solution to international governance, and that sometimes there is the need to have an international regime of rules, particularly on the conduct of hedge funds and other portfolio finances. Deregulation is more part of the problem than a solution.”

Having touched on the global financial crisis, I asked the secretary-general if he thought that African exports that might be constrained by the ongoing economic downturn in the North could be redirected towards inter-African and South-South markets. Did he feel these markets provided enough momentum to provide an alternative to Africa's traditional trading partners?

“Yes,” Kituyi responded. “There is substantial momentum, if you look at what has been happening in the recent past - there is a growing export market for African produce to non-traditional destinations. The reality is that the growing middle-class in some non-traditional transition economies is creating opportunities and potential markets that did not exist before for Africa.”

We continued our conversation by discussing how the global economic landscape is currently evolving. Kituyi pointed out that for his own country, Kenya, China had become the second biggest provider of Official Development Assistance (after Japan) – a fact that might surprise many who would not have thought that the traditional sources of aid, essentially from the North, are fast being subsumed by Asian economies (even if Japan is within the world’s developed economies grouping).

The picture is a little different when it comes to foreign direct investment (FDI). “I think with African economies, they will still have their traditional sources for FDI which are mostly European, but there are certain dynamics within the FDI picture that many people do not realise.

“For example, Kenya is the second largest source of FDI to Tanzania and Uganda. These kinds of regional movements and dynamics are not always comprehended, but they are very significant. And South Africa is becoming a very important source of FDI within sub-Saharan Africa, so we are looking at these trends and noting that these are more medium- and long-term investments, not the fly-by-night portfolio funds that come in to buy government equities because of mismanagement, then fly out again the next day with super profits.

“So we are saying, look at the innovative products that are coming to market and make sound decisions on the basis of what is available – that is the level of dialogue that we are trying to engage with African governments.”

The secretary-general clearly has a long-term vision for Africa's economies, but, as he says, and what makes a sensible bottom line to end on is: “Africa’s economic growth does not have one question, so it cannot have one answer.”

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